Posted by Sandeep Rai (Principal Consultant) August 18, 2020

Nothing Special in Special Allowance to EPF Calculation

Nothing Special in Allowance pertains to EPF Calculations

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Multiple actions before the Supreme Court of India had raised a common question of whether certain allowances (such as travel allowance, canteen allowance, special allowance, management allowance and conveyance allowance) paid by an employer to its employees would fall within the category of ”basic wages” for purposes of computing contributions to the Provident Fund (PF) under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. In a recent action, the Supreme Court in a 28 February 2019 order,1 held that:

  • If any amount is to be excluded from basic wages, it must be shown that the employee’s entitlement to receive the extra amount was not related to the normal work the employee was otherwise required to perform.

The Hon. Supreme Court in a 28 February 2019 order, held that:

  • If any amount is to be excluded from basic wages, it must be shown that the employee’s entitlement to receive the extra amount was not related to the normal work the employee was otherwise required to perform.
  • (The Above mentioned guidelines are Food For Thought or not is matter of discussion)


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